A maker of over-the-counter self-care products, Perrigo supplies store-brand medicines to retailers and also sells its own brands like Opill®, Mederma®, Compeed®, and Solpadeine® across North America and Europe. The company traces back to 1887, when Michigan general-store owner Luther Perrigo began packaging medicines and household goods for other country stores — and pioneered the private-label idea by printing each store's own name on the labels. The company still bears his name today.
Perrigo Q2 gross margin fell 3.7 points to 30.7% as lower volumes and mix outweighed tariff refunds.
Perrigo returned to in Q2, but compressed sharply. fell 3.2% to $1.02 billion and operating income dropped 48.2% to $23.5 million, as lower volumes and unfavorable product mix more than offset a $9.6 million tariff refund. The business is stabilizing after a , but profitability remains under pressure from demand softness.
Key takeaways
contracted 3.7 points to 30.7%, driven by lower sales volumes, planned manufacturing under-absorption, and unfavorable product mix, partially offset by a $9.6 million tariff refund benefit.
Consolidated decreased 3.2% to $1,022.8 million, reflecting lower retailer levels, soft consumption in the Self Care , and the April 2026 divestiture of the Dermacosmetics business.
fell 48.2% to $23.5 million, as the decline from lower volumes and mix was only partially mitigated by a reduction in operating expenses.
Section summaries
Management's Discussion and Analysis
Q2 FY2026 net sales fell 3.2% to $1.02B; operating income dropped 48.4% on lower volumes and unfavorable mix, partly offset by tariff refunds.
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Consolidated decreased 3.2% to $1,022.8M, driven by lower retailer levels and soft consumption in Self Care, and the April 2026 Dermacosmetics divestiture.
Infant Formula sales rose 23.1% to $100.9 million, driven by contract shipment timing and store brand gains, and the swung to a $4.0 million from a prior-year loss.
A $331.8 million non-cash was recorded in the first half of 2026, fully impairing the Infant Formula and Oral Care reporting units and partially impairing Women's Health.
was an $82.6 million inflow for the quarter, but the first half of 2026 saw a $31.0 million outflow, while investing cash flow was boosted by $337.0 million in proceeds from the Dermacosmetics sale.
What changed
The $40M-$50M annual tariff cost flagged in FY2025 is now partially visible, with a $9.6 million refund benefit offsetting some pressure this quarter, but the underlying impact from tariffs and other costs remains a .
The up to $350 million in additional Q1 2026 flagged in the FY2025 10-K materialized as a $331.8 million charge, fully impairing Infant Formula and Oral Care and partially impairing Women's Health.
The strategic review of the infant formula business, announced in Q3 FY2025, has not yet resulted in a sale, but the business returned to in Q2 on a 23.1% sales increase.
The Dermacosmetics Business sale, flagged as closing in Q1 2026, was completed in April 2026, with proceeds boosting investing cash flow and removing that stream from continuing operations.
What to watch
Q3 2026 trajectory to see if the 30.7% level stabilizes as the $40M-$50M annual tariff cost continues to flow through and the impact of the Dermacosmetics divestiture is fully lapped.
Infant Formula sustainability after the Q2 swing to a $4.0 million profit, to gauge whether the 23.1% sales increase reflects durable demand or contract timing.
Self Care sales recovery after the 3.7% Q2 decline, particularly as the cough and cold season approaches and retailer levels normalize.
Progress on the two-year toward the $80M-$100M annualized pre-tax savings target, with $12 million achieved in Q2.
contracted 370 to 30.7% due to lower volumes, planned from prior-year sales, and unfavorable mix, partially offset by a $9.6M tariff refund benefit.
Self Care sales fell 3.7% on unfavorable pricing and lower cough/cold incidence; declined 16.2% despite $12M in savings.
Infant Formula sales rose 23.1% to $100.9M on contract shipment timing and store brand gains; swung to a $4.0M from a prior-year loss.
turned negative at -$31.0M for H1 2026, while investing cash flow surged to $337.0M from the Dermacosmetics sale proceeds.
A $331.8M non-cash charge was recorded in H1 2026, fully impairing Infant Formula and Oral Care reporting units and partially impairing Women's Health.
Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes to our quantitative or qualitative disclosures found in Item 7A, "Quantitative and Qualitative Disclosures about Market Risk," of our 2025 Form 10-K.
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There have been no material changes to our quantitative or qualitative disclosures found in Item 7A, "Quantitative and Qualitative Disclosures about Market Risk," of our 2025 Form 10-K.
Refer to Item 1. Note 15 and Item 1. Note 16 of the Notes to the Condensed Consolidated Financial Statements. 51 Perrigo Company plc - Item 1A Risk Factors
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Refer to Item 1. Note 15 and Item 1. Note 16 of the Notes to the Condensed Consolidated Financial Statements.
51
Perrigo Company plc - Item 1A
Risk Factors
Our 2025 Form 10-K includes a detailed discussion of our risk factors. At the time of this filing, there have been no material changes to the risk factors that were included in the Form 10-K.
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Our 2025 Form 10-K includes a detailed discussion of our risk factors. At the time of this filing, there have been no material changes to the risk factors that were included in the Form 10-K.